Insurance 101 (Post 911)
By Paul Epstein

Just a short time ago, people complained about their insurance premium payments. It was likely that when you went out to dinner, you would overhear someone at a near by table telling a friend how expensive their business insurance was. "The cost of my workers compensation insurance just keeps getting higher. I think they are trying to stop the small businessman from making a living." "My general liability insurance is almost 10% higher than last years, I don't know how they can keep raising the costs on me".

            Well, that was then, and now, after September 11, 2001, it got a lot worse.

            As you may have heard, insurance is a cyclical industry. Insurance carriers make their money in various ways. The main profit for an insurance company is usually obtained by writing good, clean, profitable insurance. Next, insurance carriers make investments, which may be used to supplement the insurance carriers financial standing, and add to that insurance carriers profitability and ultimately, their competitive advantage in the insurance marketplace. Just prior to Sept. 11, the insurance industry was going into a hardening cycle. This meant that prices were beginning to go up, not too badly, but up just the same. Some insurance carriers were considering non-renewal of some of the less profitable business, and others had not yet made the tough decisions.

            When the world was shocked by the attacks on 911, it impacted the insurance industry in many ways. There was loss of life (Life insurance death benefits), disability payments, injured workers, (workers compensation), the loss of the Twin Towers (building and property loss to the owners of the building, Business owners insurance policies covered the business tenants that occupied the buildings, Down time or Loss of Use (Business Interruptions) for lost income and down time was covered by insurance policies, etc, etc. Etc. Keep in mind that insurance carriers buy insurance (Reinsurance) from other insurance companies. That way, if a catastrophe occurs, it's less likely that an insurer will go BK!

            You may have heard about the "mold" claims. Insurance carriers have been held responsible for the damage to both people, and property for damage caused by mold! (By the way, mold has been around as long as there has been life on earth!) This was never an issue except for the last few years. Insurance carriers are now placing "Mold Exclusions" on most if not all insurance policies they issue. You can read about the mold claims and issues by going to www.InsuringForYou.com, and checking out the interactive information. You will be able to purchase coverage for general liability and mold, and "Pollutions" under separate specialty insurance policies.

            Current insurance market place conditions have essentially excluded the availability for several classes of business ventures. Hard hit have been the new home residential builders and contractors. Any work involving earthquake retrofit, & Roofers, have seen coverage harder to find, and 5 to 10 times the cost, if it can be found at all.

            Don't despair; there are still some good deals, such as the small business retail, wholesale, office and service programs offered by several carriers. Some are lots better than others.

            So, what's next? Well, some insurance professionals have expressed their belief that within the next 18 months or sooner, the industry will once again become more competitive and aggressive.  Recent events in the stock market add fuel to the fears that we're not out of the hot water yet. Doubt and concern over the terrorist and our reaction to them, which could include war, may cause either a boom, or bust.

            One thing is for sure, our economy will continue, our businesses will continue to exist, and the need to protect our family, our futures, and ourselves will continue. Insurance will continue to provide that protection. There are programs available to provide the insurance protection you need. You now must find the most cost effective way to do business, and be sure to keep on top of your business options. Now, more than ever is the time to have professionals you can trust, and count on. Good advise, and knowledge is vital to those that listen, and use that information to their advantage.

            You can find out more by logging onto http://www.insuringforyou.com/. Please let us know your questions, and comments. Paul B. Epstein, Epstein Insurance Services. MPM